Jawbone stuck on tight leash with BlackRock loan

If there's one mantra everyone should be telling themselves on a daily basis its that "there is no easy money." Jawbone seems to be quite well aware of that, as its latest loan came with some rough terms, Business Insider finds.

In an analysis of start-ups conducted for Business Insider by Mattermark, Jawbone was one of the "unicorns" - companies with private-market valuations of greater than $1 billion (£650m) - seen to be at the greatest risk of failure, it says in the report.

Back in February, the company raised $300 million (£193m), but as we now know, that was not an equity investment, but instead a loan from BlackRock, the American multinational investment management corporation.

As reported by Bloomberg View, the loan came with some rough terms: “BlackRock would be paid before vendors, other lenders and equity holders, including Andreessen Horowitz, one of Jawbone's most prominent venture investors. Public filings show that previous lenders Wells Fargo and Silver Lake, a private equity firm, ended loan agreements with Jawbone at the same time that the BlackRock deal was done.”

The report also said that with such loans, companies usually don’t get the entire deal at once, but instead the funds get released over time.

"Companies that take these sorts of huge loans are usually allowed to draw them down when they hit milestones based on a well-thought-out business plan that was created with the lender," Bloomberg View quotes Goodwin Procter lawyer Michael Pappone.

Jawbone is still not in calm waters, but it is swimming and is not ready to go under just yet.